Maruti's share was down 2.6% (Reuters)
Maruti's share was down 2.6% (Reuters)

Maruti Suzuki to shut Manesar, Gurugram plants for two days

  • Automaker to shut units on 7 and 9 September as it expects sales to remain flat during the festive season
  • This is the first time that the firm will shut both the production units together for two days

Maruti Suzuki India Ltd said on Wednesday that it will suspend vehicle production at its plants in Gurugram and Manesar as the automaker battles an unprecedented slowdown in sales.

India’s largest passenger vehicle maker by sales will shut the two plants on Saturday and Monday, according to a company statement. This will be the first time the company will close both plants simultaneously for two days in its more than three decades long presence in India.

The step is an indication that the Suzuki Motor Corp. unit expects sales to remain weak even during the crucial festive season. The production shutdown is exceptional as Maruti tends to keep its factories at optimum levels in the run up to the festivals.

India’s auto industry has been in the grip of a prolonged slowdown.

Most passenger vehicle manufacturers have been cutting production as sales fell for the 10th consecutive month in August. Maruti cut production by a third in August, for the seventh straight month. Vehicle production at Maruti’s three plants, including the one in Gujarat, plunged 34% year-on-year (y-o-y) to 111,370 units in August.

Automakers traditionally boost vehicle production ahead of the festive months of September through October-November, as sales during the festival season constitute almost a third of the vehicles sold during the year.

This year, expecting a muted response from customers, other manufacturers such as Hyundai Motor India Ltd and Mahindra and Mahindra Ltd reported a double-digit decline in wholesale dispatches to dealerships in July and August before the festive season kicked off with Ganesh Chaturthi in the western states, which will be followed by Onam on 12 September in southern states, especially Kerala.

Maruti’s domestic wholesales in August fell 36% y-o-y to 94,728 units. This is the third time the firm has dispatched fewer than 100,000 vehicles to its dealerships in a particular month since July 2017. Vehicles dispatched by the top six passenger manufacturers fell 34% y-o-y in August to 171,193 vehicles.

Taking a cue from the companies, dealers have also turned cautious in adding to their vehicle stocks. Ashish Kale, president, Federation of Automobile Dealers Associations (Fada), said sales during the festival season are expected to remain flat or grow marginally, compared to last year.